2014 State of the Industry: Digital Drives Increasing Change

Want a sure sign of an ongoing sea change in the printing industry? How about this: “With more than 95 percent of government information being published digitally, the time has come for our name to reflect that.” That quote came from Public Printer Davita Vance-Cooks in congressional testimony on her proposal to change the name of the Government Printing Office (GPO) to the Government Publishing Office to better reflect the “broadening menu of digitally-based services to serve the information product needs of Congress, federal agencies, and the public.”

Name changes usually follow substantive changes. As communications technology changed, American Telephone and Telegraph morphed into AT&T. As printing technology changed, the National Association of Printers and Lithographers (NAPL) evolved into the National Association for Printing Leadership (NAPL)—a clever name change without loss of a well-known brand. NAQP tried to polish up its image with a name change to PrintImage International, thus trading a known brand for meaningless buzz words until they came to their senses and changed back.

Lately, the folks who put on Graph Expo and PRINT have been insisting that we are all part of something called the “graphic communications industry”. I’ll go with that until something better comes along. In any case, let’s look at how this industry has evolved and where it is headed.

What We Produce

The industry still produces marks on paper, but now digital inkjet and toner are replacing offset. One had only to walk the floor of PRINT 13 to see how things have changed. There was only one traditional offset press on the show floor. That shouldn’t be any surprise to anyone. In 2001, offset (including prepress) accounted for 47.5 percent of sales in the franchise segment of the industry. The latest figures show it accounting for 28.5 percent. Meanwhile, digital printing has jumped from 7.2 percent of sales to 41.5 percent. Today in Quick Printing’s Top 100, offset sales (including prepress) account for 35.67 percent of sales with digital accounting for 36.51 percent.

So, while the move away from offset to digital is clear, it doesn’t take a math genius to see that roughly a third of sales are coming from something other than putting marks on paper. Some of these non-print sales are easy to grasp. Mailing and fulfillment are natural adjuncts to a digital printing operation. So are wide-format printing and signage. Other possibilities sound interesting but require new skills and approaches. One wonders if they are actually producing significant sales for the majority of printers.

Are people making money with cross-media marketing, QR codes, PURLS, social media management, website design and maintenance, database management, marketing services, or personalization? Sure, many are doing so, but others lack the skill or desire or interest to try these new things or they are unsure how to market them to their customer base. Still others are not certain how to meld these new technologies into their existing “graphic communications” businesses. As noted in NAPL’s latest State of the Industry report, “there’s a big difference between diversifying and diversifying profitably.”

The problem, of course, is that those printers who are resisting or afraid of diversification face being left behind. According to the NAPL report, “We are offering services we would not have considered five years ago, and will be offering services in five years that we are not considering today. That’s how quickly communication is changing.”

What to Sell

The old joke is “Quality, price, or service—pick two.” In fact, printers have been using terms such as value, service, speed, quality, and reliability until they have lost all real meaning, especially to customers. Printers also tend to talk in jargon. Customers don’t know what VDP or Web-to-print mean. Even then, they need to be shown the specific benefits that any new technology or approach can bring to their business.

Last October I had the opportunity to attend the grand opening of a Kodak digital demo center at ImageMark, a full service printer in the Charlotte area. It is a slick operation with the latest Kodak digital equipment, along with offset and many other capabilities. I did a little website homework beforehand and came across what I think is one of the better definitions of what the company is all about: “ImageMark employs communication technologies to custom design flexible systems to grow your business. At one time a traditional printer, ImageMark now serves corporations across the nation with sophisticated strategies that involve Internet, email, design, on-demand Web-to-print ordering, storefronts, personal Web addresses and, oh yes, printing.” In other words, they use the latest and most progressive technology to help their customers grow their businesses.

Of course, it helps to know what your customers need before you try to offer them something. This is where I see many printers fall down on the job. Not only do you need to stay in touch with your best customers on a regular and personal basis, you need to understand their businesses and industries. NAPL suggests attending their industry trade shows and events and participating in their associations. Most likely there are also trade publications for their industry that you should subscribe to. Check out their websites or their LinkedIn or Facebook pages. The printers who are doing this sort of research and communication are generally the ones who are finding the most success in rolling out the new non-print offerings.

Winning the Battle

It’s no secret that in any group average you will have some winners and some losers. For instance, the latest Quick Printing Top 100 had an overall annual sales increase of 10.15 percent. Within that group, 18 posted sales losses, while 28 had gains of more than 10.15 percent. In the group NAPL surveyed for its report, sales were up an average of 21.1 percent for the top fifth of the group and down 14.8 percent for the bottom fifth.

“The companies that are taking off aren’t growing with the market, they are taking market share—they’re getting on the right side of the market redistribution—by getting more efficient, more competitive, and more valuable to their clients.” In my opinion, they are doing so by actively learning what their customers need and then applying the best technologies to meet those needs, even if sometimes it actually is marks on paper.

The Year to Come

What will 2014 bring to the graphic communications industry? Some firms will go out of business, some will succeed handsomely. The migration from offset to digital will continue, with an increasing push from inkjet. According to InfoTrends, digital color, much of it short-run, will be a dominant player, with sales growing to some $40 billion by 2016. More and more printers will move into wide-format digital as part of their marketing services offerings. More sophisticated personalization will continue to grow, although not as rapidly as once thought. Printers will also move into more specialty printing as inkjet allows a wider variety of substrates. More printers will master the art and skill of cross-media marketing. And the key to success will be to know your customers’ needs and meet them.